After a small upward revision, world cereal output in 2000 is now provisionally estimated at 1 852 million tonnes (including rice in milled equivalent), which is 1.8 percent less than the previous year, and also below the average of the past five years. The forecast of anticipated global cereal utilization in 2000/01 has also been adjusted upward since the previous report, by 14 million tonnes, taking it to 1 909 million tonnes. Thus, the shortfall in production now stands at 51 million tonnes. However, despite the prospect of a large reduction in stocks, prices for wheat and coarse grains in international markets have made only small gains in the past three months, mostly because of large supplies in exporting countries.
|(. . . . . . million tonnes . . . . . .)|
|Production 1/||1 900||1 885||1 852|
|Supply 2/||2 574||2 585||2 543|
|Utilization||1 872||1 898||1 909|
|Ending Stocks 4/||700||691||640|
Early indications for the 2001 wheat crop in the northern hemisphere, which is already mostly planted, suggest that output could at best remain close to the reduced level in 2000. In North America, winter wheat plantings fell again in the United States mostly due to dry conditions at planting time, while in Canada, the area of wheat to be planted this spring is expected to remain virtually unchanged. In Asia, early indications point to smaller wheat crops in China, India and Pakistan. In Europe, the wheat area in the EC is expected to decrease, reflecting adverse weather at planting time in some parts and a likely diversion of land to feed cereal and oilseed crops. However, elsewhere in Europe, some recovery in production could be expected after drought reduced output in 2000. In the Russian Federation and the Ukraine, plantings have increased significantly and conditions have been satisfactory. In North Africa, conditions for the winter wheat crops have been generally favourable so far, and output could recover somewhat from last year's reduced level. In the southern hemisphere, wheat planting for the 2001 harvest will start from April.
Regarding 2001 coarse grains, crops are already planted in some of the major southern hemisphere producing countries. In southern Africa, despite generally favourable growing conditions during the season so far, output may decline this year due to a reduction in area. In South America, growing conditions have also been generally favourable. Plantings are down in Argentina but increased in Brazil. Coarse grain planting in the northern hemisphere starts from about April. In the southern hemisphere and around the equatorial belt, the 2001 paddy season (main crops) is well advanced and harvesting of the crop is expected to begin around March. In the northern hemisphere, planting for the 2001 season will not start until April/May.
World wheat production in 2000 is provisionally estimated at 586 million tonnes, 4 million tonnes up from the forecast in November, but still about 1 percent below 1999 and just below the average of the past five years. This month's revision mostly reflects upward adjustments to the final estimates for some Asian countries, Canada, and the EC. World output of coarse grains in 2000 is now put at 869 million tonnes, virtually unchanged from the forecast in November, 2 percent down from the 1999 level and 2 percent below the average of the past five years. Latest revisions involved a further significant reduction of the estimated output in the United States and downward revisions for some African countries, but these were mostly offset by upward revisions for some countries in Asia, South America and the EC. In the northern hemisphere, harvesting of the 2000 paddy season is still underway in several countries in Asia, with some delays caused by flooding in Laos, Thailand, Bangladesh and Cambodia. Global paddy output is now provisionally estimated at 594 million tonnes, marginally up from the forecast in November. At this level, global production would be some 17 million tonnes below the revised estimate for 1999, the most significant decline in three decades. A number of factors have contributed to this large contraction: ranging from natural disasters and low prices that have prevailed in the past and current seasons, to government policies aimed at cutting excess supply.
The latest forecast for world cereal trade in 2000/01 (July/June) now stands at 236 million tonnes, some 2 million tonnes less than was reported in November but, nevertheless, a record high level, over 1 million tonnes above the previous year's volume. The forecast for global trade in wheat and wheat flour (in grain equivalent) in 2000/01 has been lowered to 108 million tonnes, 1.5 million tonnes less than forecast in November and slightly below the estimate for the previous year. By contrast, the forecast for world trade in coarse grains in 2000/01 has been raised by 500 000 tonnes since the last report, to 105 million tonnes. This would be a record level for trade in coarse grains, 1.8 million tonnes, or almost 2 percent, above the previous year's level. The forecast of rice trade in 2001 has been adjusted downward, from the last report, by 80 000 tonnes to 23.2 million tonnes. At this level, it would be about 3.5 percent above the estimated volume traded in 2000.
Total cereal imports by the developing countries in 2000/01 are likely to reach 168 million tonnes. This would be above average but slightly below the previous season's record volume. In value terms, the cereal import bill of the developing countries is expected to total US$23 billion in 2000/01, almost US$2 billion, or 9 percent, more than in 1999/2000. Total imports by the Low Income Food Deficit Countries (LIFDCs) in 2000/01 are now forecast at around 70 million tonnes, down from the previous report and over 1 million tonnes below the previous year's estimated level. At the current forecast level, the overall cereal import expenses for the LIFDCs, as a group, could reach US$9.5 billion, up 8 percent from 1999/2000. The increase would be mostly because of relatively stronger prices this season.
The estimates of world cereal stocks and utilization have been adjusted for the past two decades following major revisions in the cereal supply and demand balances of China. A review of China's historical supply and demand balances for cereals resulted in much higher stocks and feed use, but lower per caput food consumption than estimated earlier. However, it is important to highlight that the changes, as large as they might seem in absolute terms, only represent statistical adjustments in the historical supply and consumption series and, therefore, have negligible or no impact on the world cereal markets.
To illustrate, while the estimates for world cereal stocks had to be raised, in line with revisions in China, the decline in world cereal stocks currently forecast for this season remains the same as was reported in the November issue of Food Outlook.
The upward revision of stocks in China results mainly from higher estimates for the private (mostly on-farm) as well as the public stocks. It must be underlined that the latest revisions provide a more accurate picture of the domestic cereal supply situation in China and help to explain the continuation of large cereal exports and low domestic prices against the background of a sizeable cut in cereal production in 2000.
Another aspect of the revisions in China is the reduction in the estimates for per caput cereal food consumption. An analysis of domestic cereal utilization in China reveals lower per caput food consumption figures than previously assessed, while cereals used for animal feed are believed to be much higher, especially in recent years. Given its large population, the changes in per caput food consumption estimates in China have also a noticeable impact on the estimates of per caput cereal food use at the global and regional levels. For example, the lowering of the per caput food consumption in China, from over 200 kg to just under 190 kg, resulted in a reduction of around 5kg in the average for the developing countries as a group. Overall, however, because the revision of cereal utilization in China mostly involves redistribution between the food and feed categories, the revised total world cereal utilization has only been slightly affected.
Overall, international wheat prices continued to rise slightly in late 2000 and early 2001. However, the gains were limited in view of reduced purchasing activity during the year-end holiday period and the arrival of new crop supplies in the southern hemisphere. In January, the US wheat No. 2 (HRW, fob) averaged US$134 per tonne, some US$3 per tonne more than in October 2000 and as much as US$23 per tonne, or 17 percent, above the previous year. However, with exportable supplies still ample, and prospects for the 2001 crops reported to be generally satisfactory, futures markets remain under downward pressure and the near-by wheat futures ended January slightly weaker than a month earlier. International maize prices also rose overall from October to January. In January, the US maize export prices averaged US$95 per tonne, up US$10 per tonne from October and US$2 per tonne higher than a year earlier. However, large supplies among the major exporters continue to influence the market and the average price for the first half of the current marketing season, remained below the comparable period of last season. In the futures market, near-by maize futures came under pressure again in January, reflecting the expectation of a likely resumption in large sales from China. Rice export prices resumed their downward slide through November and December 2000, after a short respite in October, when they temporarily recovered, in reaction to the weather problems which hampered shipping activities in Viet Nam. The FAO Export Price Index averaged 95 points in January 2001, down from the 97 points in October 2000. Barring any unexpected shock, prices are likely to resume a downward trend in the coming weeks, largely due to the arrival, in February-March, of new rice crops from exporters in the southern hemisphere and from Viet Nam.